Citi flags a scope for AUD to weaken in the near-term but remains structurally bullish on the currency through the end of the year.

"Looking deeper at the AUD developments, ABC News reported that China has banned imports from some Australian abbatoirs - note though that they have not been officially delisted or lost their licenses yet. This comes just days after China flagged plans to introduce an 80% tariff on Australian barley.

Market chatter of potential tariffs imposed on Barley exports to China is a clear retaliatory barb given the strong stance the Australian government has made to holding whoever is responsible for this Covid outbreak accountable. Watch this ramp up as we also look for supply chain redistribution away from China, this is the embryonic stages of the end of Australia’s reliance on China for economic growth (alone).” Citi notes.

"CitiFX Technicals notes that Monday’s close in AUD below 0.6493 suggests that 0.6373.6379 could be tested again," Citi adds.